After ripping higher on news that Australian economic growth rose by 1% in the March quarter, more than economists had been expecting, the AUD/USD held onto gains in European and North American trade, helped largely by renewed weakness in the US dollar.

The greenback was pressured by a lift in the euro, the largest component in the US dollar index, following hawkish remarks from ECB officials.

“ECB chief economist Praet made it clear that at next week’s policy meeting the governing council will ‘assess whether progress so far has been sufficient to warrant a gradual unwinding of our net purchases’,” said analysts at the National Australia Bank.

Praet said that inflation is showing signs of convergence towards the ECB’s target, adding that underlying strength in the economy and a tightening labour market is translating into wage growth and less labour market slack.

German Bundesbank President Jens Weidmann conveyed a similar view, noting that inflation was expected to gradually return to levels compatible with the ECB’s target.

The hawkish language saw bond yields in Europe and the US increase, supporting the euro to the detriment of the greenback.

That also helped to support the AUD/USD which closed the session at .7667, the highest level since April 23.

Investing.comAUD/USD Hourly Chart

Turning to the day ahead, local focus will be on the release of Australia’s trade report for April at 11.30am AEST.

A trade surplus of $1 billion is expected, smaller than the $1.527 billion figure reported in March.

While not traditionally a market mover, given Australian Q1 GDP was boosted by strength in international trade, many will be looking to see whether those tailwinds continued into the June quarter.

It also suggests that it could generate some short-term volatility in the Aussie.

Besides the trade report, the Ai Group will release Australia’s Performance of Construction report at 8.30am AEST.

“The AUD/USD hasn’t been able to kick on the way it might have after the strong GDP data yesterday because it seems trapped at a confluence of resistance which it needs to get up and through if the rally is going to continue,” he says.

“Last night’s high of 0.7673 is now the key — if that breaks we can head toward 0.7724 and if that breaks we are back at 78 cents.”

Abroad, data highlights today include German industrial orders, trade figures from France, the second read of Q1 Eurozone GDP along with consumer credit and jobless claims data from the United States.